Law firms’ insurance premiums have risen by at least 9 per cent, figures released by the Law Society indicate.
The figures on the total amount firms have paid for their first £1m of professional indemnity (PI) cover (the only figures available publicly) show they are paying £245m for this primary layer, a 9 per cent increase on last year.
It is thought that premiums for the excess layers of cover, which some firms take out for more than £200m, have increased by much more than 9 per cent.
“This is because of the large number of high-value claims that have hit the market over the past year,” explained Michael Robin, senior partner of PI specialists Robin Simon.
In 2002-03, the total amount paid by firms for the primary layer of cover was £225m, an increase of more than 25 per cent on 2001-02.
Firms paid £166m for the first layer in 2001-02 and £154m in 2000-01, the first year they bought insurance on the open market following the collapse of mutual insurer the Solicitor’s Indemnity Fund.
This year, as last year, Zurich sold the most primary layer cover to law firms, closely followed by St Paul International.
Total cost of premiums for primary layer cover: Only 20 firms have slipped into the Assigned Risk Pool (ARP), the home for firms thought too high risk to buy insurance on the open market, but a Law Society spokesperson said that this number could increase. Last year, 45 firms went into the ARP.